Distilled
A private equity buyer pushed EUR 140 million of acquisition debt into the Netherlands, mirroring its external bank facility and adding a 0.05 per cent handling margin. The Amsterdam Court of Appeal reversed the court below and refused the deduction. The taxpayer could not show what concrete commercial consideration drove the restructuring, its board minutes recited benefit without saying what it was, and its own tax structuring paper supplied the motive.
The facts
The taxpayer is a Dutch acquisition and financing holding company — an empty intermediate holding, in the Inspector's words. It sits within a group headed by an international investment undertaking which had acquired an international retail chain. The Dutch operating company is a limited risk retailer, its operating profit adjusted annually to a fixed 9 per cent of turnover.
On 24 August 2017 the group entered into a Senior Facilities Agreement with a bank syndicate: Facility B1 of GBP 450,000,000 at a 5.25 per cent margin, and a euro-denominated Facility B2 of 415,484,382.77 at 4.25 per cent. Clause 3.1 stated its purposes — satisfying the acquisition consideration, financing acquisition costs, and refinancing existing debt.
On 31 August 2017 the taxpayer borrowed EUR 140,000,000 from its then sole shareholder, a Jersey-incorporated but UK tax-resident finance company. The rate was EURIBOR plus the Facility B2 margin plus 0.05 per cent — an effective 4.30 per cent over EURIBOR. Maturity, repayment schedule and fee payments were mirrored to Facility B2, and the agreement was governed by English law. The same shareholder simultaneously subscribed 93,289,880 of share capital — a deliberate 60:40 debt-to-equity split, set with the then acquisition-debt limitation in mind.
The taxpayer deducted 6,147,879 of interest, an amortisation charge of 757,631 on costs allocated to the group's senior notes issue, and a further 82,911 of other interest. By assessment of 30 July 2022 the Inspector refused all three, computing taxable profit at 13,457,369. By the appeal the charge was in dispute only as to the recharged revolving facility fee and legal fees.
The litigation
Rechtbank Noord-Holland · 28 August 2025 · taxpayer prevails
The District Court allowed the appeal and reduced taxable profit to 6,596,827. The taxpayer succeeded on the double business-motive test, on the recharged fees, on the other interest, on the allegation that the loan was not business-motivated, and on the 0.05 per cent margin — and it found the terms sufficiently parallel. The court accepted that the provision was engaged and that the required return had not been filed, declining only to impose the sanction, and agreed that the price paid for the Dutch operating company exceeded market value, a finding without consequence for the tax due.
Gerechtshof Amsterdam · 20 August 2026 · authority prevails
The Inspector appealed. The Court of Appeal annulled the judgment below, save as to its costs awards, and reinstated the assessment at a taxable amount of 13,440,876 — the original figure less 16,493 of pre-acquisition interest the Inspector had abandoned at the first hearing. It also reversed the court below on the burden of proof: by failing to answer the anti-base-erosion question on the return, the taxpayer had deprived the Inspector of the chance to examine the position, and no arguable contrary view was available. It refused costs for the appeal and refused actual costs. Having decided the case on the anti-base-erosion provision, it left the Inspector's alternative cases — excessive transfer price, sham, non-business-motivated loan and abuse of law — undecided.
ajiho commentary
Abstract commercial possibility is not a business motive
The ratio is evidential and demanding. What matters is not whether a legal act could yield a commercial advantage in the abstract, but which concrete consideration actually moved the taxpayer and its group to enter into it — and only on that basis can non-tax motives be shown to have been decisive. Where the file holds nothing beyond the taxpayer's own assertion in the proceedings, the burden is not discharged. Here the alleged cash-flow efficiency and group positioning appeared nowhere but in argument.
Mirroring is not parallellie — but note where this sits
What Dutch practice calls parallellie asks whether an internal debt is in substance owed to a third party. Testing it, the Court held, does not serve to assess whether two related entities have replicated a bank loan as closely as possible internally, with deductibility as the goal. Two cumulative requirements apply: the external loan must have been intended for, and actually used to fund, the internal loan — a causal, historical link, the third party being the real provider of funds — and only then do the terms matter. Read it carefully before relying on it. The Court reached it as an alternative ground, having already decided the business-motive question, and decided the funding point on burden of proof rather than by finding where the money came from. The court below had found the terms sufficiently parallel. The conduct also failed to match the drafting: in the following year 7.6 per cent of the internal loan was repaid and nothing on the bank loan, and 3.9 per cent was booked against a 4.3 per cent agreed rate. Two courts, opposite results, untested in cassation.
The facility's purpose clause became a tax risk
The Court read clause 3.1 against the borrower: because the stated purposes did not extend to funding an internal Dutch share purchase, the on-lend was precisely not what the facility was for. Banking documentation drafted for lender protection can now defeat a tax position, and alignment between the purpose clause and the intended push-down deserves attention at signing rather than after the event.
Boilerplate board minutes are worse than useless
The minutes recited exactly the language practitioners deploy as routine — corporate interest, no prejudice to creditors, bona fide commercial reasons, arm's length terms, corporate benefit. The Court held they contained no indication of a business consideration at all, because they never said in what that interest and benefit concretely consisted. Worse, because they cross-referred to the tax structuring paper, and that paper gave only tax reasons, the Court proceeded on the footing that if the board had any concrete corporate benefit in mind, it must have lain in the tax consequences. Empty recitals did not merely fail to help; they pointed at the answer.
The structuring memorandum was the prosecution's best evidence
The adviser's scope of services — to push acquisition debt into the Netherlands, so far as achievable, to offset a portion of Dutch taxable profits with interest expense — and the structure paper's candid description of the double advantage, deduction at the higher Dutch rate plus headroom for further shareholder debt within the UK interest cap, established motive. The engagement letter was not the taxpayer's own, and the wording was hedged; neither saved it. The irony is sharp: the same memorandum advised that there should be a clear link between the intercompany loan and the external debt, substantiated by mirroring key terms — and the Court quoted that advice as evidence the mirroring had been engineered for deductibility.
One book year, two versions of the test
Before 2018 a single business-motive test applied, and showing the debt was in substance owed to a third party satisfied the counter-evidence rule for both the debt and the associated act. From 1 January 2018 the motives for the act must be tested separately. The Court held immediate effect does not reach interest accrued before entry into force, and that the corporate tax act has no equivalent of the transitional provision in the income tax act. A straddling book year therefore splits — and the court below had held the opposite. Any Dutch corporate with a non-calendar year end has a bifurcation argument.
What this means for your business
On existing push-down structures. Mirrored terms are not enough on their own. Be able to trace the money from the external facility to the internal loan, and keep that evidence — the taxpayer lost the point because it could not show the link, not because the Court found against it.
On banking documentation. The purpose clause is now a tax document. Where a push-down is intended, it needs to fall within the stated purposes of the facility said to fund it — a point to raise with lenders at signing.
On board minutes. Recitals of corporate benefit that do not say what the benefit concretely is carry no weight, and may carry negative weight. If the board weighed specific commercial advantages, minute them specifically.
On advisory memoranda. A structuring paper setting out the tax rationale is discoverable and will be read as the reason. That is not an argument against taking advice; it is an argument for the file also recording the commercial considerations actually weighed, at the time they were weighed.
ajiho will continue to monitor Dutch decisions on acquisition financing and the anti-base-erosion rules, and will cover any cassation in this case in a future FT Case.
Case reference
Inspecteur van de Belastingdienst v [X Y] Finance (Netherlands) B.V., Gerechtshof Amsterdam, ECLI:NL:GHAMS:2026:2322, zaaknummer 25/2006, judgment pronounced in open court 20 August 2026, published 21 August 2026. On appeal from Rechtbank Noord-Holland, HAA 23/4895, 28 August 2025. Book year 1 October 2017 to 30 September 2018. The judgment is anonymised. Appeal in cassation to the Hoge Raad lay open to both parties within six weeks of dispatch; the text does not record whether cassation was lodged. Primary source: official judgment.
The judgment gives the amortisation charge as 757,637 in one place and 757,631 in another. Amounts are stated without a currency symbol in the anonymised text; euro is to be inferred from the loan and facility documentation.